Pre-approved credit card offers are on the rise. Companies are gearing up to obtain new customers as college students head back to school and parents begin to think about the upcoming holidays. Credit card reward program incentives focus on travel and cash back to lure new customers in.
Like any other money service, the fine print which comes along with reward offers is an important read. Along with attractive offers, there comes along with them, detailed terms and conditions. Oftentimes, there will be certain spending thresholds to meet eligibility standards. Even without particular spending expectations there are questions to consider prior to accepting a new credit line offer.
*Would you spend the money if you didn't have the new credit card? In order to take advantage of rewards programs, you have to make charges. If your budget cannot handle the additional monthly cost, it may not be in your best interest to add more debt to your finances.
*Can you afford to pay the balance off before the introductory offer expires? Most often, credit companies will hike the interest or charge accrued interest once the introductory rate is over.
*Are you spending money on something you truly need? You have the new charge card, now what do you charge? You want to earn a certain amount of points to earn the reward, but what is it that you will spend your money on?
* Would it be cheaper in the long-run to just purchase the reward up-front yourself?
* What would be the total cost in the end including fees and interest?
Before you send in the application for new credit, examine your current finances. Smart financial decisions originate from assessing the reality of your current budget and credit worthiness. A pre-approved credit card does not guarantee a new line of credit. Your acceptance gives the creditor permission to make a hard inquiry into your credit. If you are already credit challenged, you may want to decline the offer.
Base your financial decisions on what you need rather than on what you want. Fast money comes at a price. If you cannot afford to pay it off quickly, pass on the reward program this time around.